We need to make our texture show through our image and also get rid of any leftover portions of our paper texture. So first, Command-click on your image layer in the Layers palette (Control-click on Windows). This will select the non-transparent areas of the layer. Then choose Select > Inverse. Click on your original paper texture layer in the Layers palette, and then hit the Delete or Backspace key to clear the portion of your paper texture that exceeds the boundaries of your original image.
1. Move the paper texture layer (the original one) to the bottom of the layer order, and make sure it's visible. Then select your image layer, which should now be in the middle of the layer order.
2. With the image layer selected, change the Blending Mode to "Overlay" using the little pull-down menu in the Layers palette.
Here's what you wind up with. (I've added the drop shadow just so that the edges are easier for you to see.
3. Now choose the bottom paper texture layer in your Layers palette, and then select Image > Adjustments > Hue/Saturation. Check the Preview option, and adjust the hue, saturation and lightness values until you get something you like.
And there we have it.
